Bernanke, Trichet Under Pressure as Fed and ECB Urged To Lower Interest Rates

The Federal Reserve and the European Central Bank are facing increased demands to lower interest rates after the financial markets took a hammering last week on credit fears stemming from the US mortgage and home loan markets.

This means that Fed Head Ben Bernanke and the head of the European Central Bank Jean- Claude Trichet may be forced to stop raising interest rates or even begin to lower them.

The central banks around the world has already pumped over $300 billion into financial markets in order to try and stabilize the situation which is rapidly heading towards crisis point.

“The dramatic moves by many of the world’s central banks could imply that we have a whole new ball game when it comes to monetary policy,” says David Brown, chief European economist at Bear Stearns Cos. in London.

Market analyst and newsletter writer Sam Kirtley of The Gold Prices Newsletter said that interest rates are the key issue here:

“If the Fed choose to raise rates the housing market in the USA will begin to go into free-fall, but if interest rates are lowered then the US dollar will collapse. If the US collapses, gold prices will rocket and if the housing and credit crisis continues gold will still soar. As markets lost billions on Friday, gold gained more that $10 an ounce so either situation is bullish for gold. This is why we think gold and gold stocks are currently a great investment.”

Do you think central banks should lower interest rates?

If not, how are they going to stop this situation becoming a financial crisis?

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